8 must-read questions about SMSFs and property

Investing in property through your SMSF can be a rewarding strategy - but it can also be confusing for newcomers, with plenty
of complex rules to remember. To help you get started, we've put together answers to some of the most common questions
new investors ask.

1. Can I use negative gearing through an SMSF?

Yes you can.

An SMSF can claim interest and borrowing expenses on an investment property in exactly the same way as an individual investor.
So you can use negative gearing to help offset any tax on the fund's other income now, then benefit from any capital
gains on the property in the future. But remember, when you buy a property through your SMSF, you can only claim
deductions for the fund, not for yourself.

Take control of your Super with our special offer today

2. How much can I borrow?

Banks will generally lend a little less to SMSFs than they might to an individual buyer, due to the extra risk that these
loans carry given that they are non-recourse in nature. This means in the event that the SMSF defaults on the Loan
the Lender can repossess or sell the Property only, but cannot repossess or sell any other SMSF asset to recoup any
loan shortfall (if any). While different banks have different limits, a typical lender might let you borrow up to 80% of the property's value.

3. Is it more expensive to buy property through super?

Generally speaking, it costs about the same amount to buy inside and outside super. If you don't already have an SMSF, you
will need to set one up, but that doesn't have to be expensive. For example, ESUPERFUND currently has a special offer
for setting up an SMSF. Click
here for details.

4. Is investing in property through an SMSF tax effective?

Depending on your situation, buying property through an SMSF could offer significant tax benefits. Any rental income earned
by your fund's investment property is usually taxed at only 15%. And if you commence a retirement phase pension,
tax on rental income is tax free. More importantly if you commence a retirement phase pension, tax on any capital
gain is also tax free on the sale of the property! Of course, tax laws are complex, so you may wish to talk to a
tax adviser before you invest as in some cases it may be more beneficial to purchase the Property in your personal
name.

5. Can I use my SMSF to buy a holiday house?

No, you can't.

All of your SMSF investments must be for the sole purpose of saving for retirement, so you can't buy a property then
use it for personal purposes.

6. Can I use my SMSF to buy my business premises?

Yes you can.

This is a special exception, and has proved a great strategy for many business owners. By buying a business property through
your SMSF, then renting it back to your business at market rates, you can use your business rental costs to build
your super.

7. Can my SMSF buy an investment property from me or my spouse?

No, you can't.

Your SMSF is not allowed to buy a residential property from a fund member or any person associated to a fund member such
as a relative. So if you or another fund member already own a residential property, you can't transfer it into your
SMSF.

8. Can I rent my SMSF residential property to a family member?

No, you can't.

Again, this would contravene current Super Laws. That is you cannot rent residential property the SMSF owns to a fund member
or any person associated to a fund member such as a relative.

If you're interested in investing in property through an SMSF, ESUPERFUND helps makes it easy, with a fast, streamlined process.
And if you act now, ESUPERFUND is offering a
Special Free Offer! Click
here for details.

Before you start

An SMSF can be a great vehicle to take back control of your Super but an SMSF may not be right for everyone. We have conveniently
summarised other factors to consider when contemplating setting up an SMSF
here. We also assist you in understanding what is involved in the ongoing management of your SMSF via our Free
SMSF Learning Centre
here.

Learn more about SMSF

Notification of Data Collection

ESUPERFUND Trust (ABN 37 842 535 715) collects your personal information to enable us to email you the SMSF information package. The personal information collected includes your name, contact number and email address. Unfortunately if you do not provide us with the required information, we are unable to email you the SMSF information package. Please note that by receiving the SMSF information package, you agree with your express consent to provide your personal information to ESUPERFUND for marketing and promotional purposes.

We will handle any personal information we collect about you in accordance with our Privacy Policy. Your personal information will only be used for our marketing and promotional purposes and will not be shared with or disclosed to any third parties. Please view our Privacy Policy here for full details as well as guidelines on how to access and seek correction of your personal information that is held by ESUPERFUND, or on how to make a complaint in regards to a breach of the Australian Privacy Principles.

ESUPERFUND Pty Ltd

PO BOX 401 North Melbourne VIC 3051

privacy@esuperfund.com.au

"We enjoy buying property in our SMSF through ESUPERFUND… It's good to have another option to buy a property through."
- Fernando, NSWView More Stories

Login to Your Accounts

WE ARE HERE TO HELP!

The contents of this website are of a general nature only and have not been prepared to take into account any particular investor's objectives,
financial situation or particular needs. ESUPERFUND does not provide financial product advice or recommend any financial products:
This applies equally to those financial products which are established for your SMSF when you become a client of ESUPERFUND.
Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product.
We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website.
While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
When setting up a SMSF it is important to understand that additional fees may apply that must be carefully considered prior to making a decision to setup a SMSF including an
ATO Supervisory Levy
,
Company Trustee Setup Fee (where applicable)
, and
Investment Fees
.